Repeal of tax on churches appears to fail in Congress

The U.S. House of Representatives approved legislation to reverse a year-old law that calls for churches to file tax returns for the first time in American history, but it appears unlikely the effort will go any further in this Congress.

The House voted 220-183 in a nearly party-line vote for a bill that included repeal of a 2017 tax cut’s provision — Section 512(a)(7) — that required houses of worship and nonprofit organizations to pay a 21 percent tax on such employee benefits as parking and transportation. Only Republicans voted in favor of the proposal, and all but three of those opposing the legislation were Democrats.

The House’s action, however, apparently will fall short of ultimate nullification of the controversial provision. The Senate does not appear to have the votes to approve the House-passed measure, Southern Baptist policy specialists said.

“We are disappointed that despite strong leadership from Senators James Lankford [R-Okla.] and Chris Coons [D-Del.] and Congressman Mark Walker [R-N.C.], and strong bipartisan support for fully repealing the nonprofit parking tax, Congress was unable to do so this year,” said Travis Wussow, vice president for public policy of the Ethics & Religious Liberty Commission (ERLC).

“We will continue to work on this issue in the 116th Congress and continue to call on members of both parties to set politics aside and get this done,” said Wussow.

The provision in the Tax Cuts and Jobs Act that became law last December not only leveled a tax on churches and nonprofits but burdened them with accounting and compliance costs not previously required, its foes said. If the section is not repealed, the cost to the charitable sector would be a congressionally estimated $1.7 billion over 10 years, according to a November letter from a diverse coalition of opponents led by the ERLC.

Congressman Walker applauded the House’s approval in the new Retirement, Savings, and Other Tax Relief Act of language from a bill he introduced.

“Never in our nation’s history have we placed a tax on places of worship, always respecting the sanctity of our religious liberty,” Walker said in written comments. “In this season of giving, our charities and churches should be encouraged to know that the House is dedicated to stopping new taxes and compliance fees that threaten to impede the life-altering work they perform in each of our communities.”